Economy Watch: Happy Holidays for U.S. Retailers

MasterCard Advisors' SpendingPulse said that U.S. retail sales through all channels spiked 5.5 percent this holiday season compared with last year's, making it the best holiday season for retailers in five years.

Americans have apparently grown tired of frugal Christmases, and so decided to return to stores–and spend–in force this holiday season. MasterCard Advisors’ SpendingPulse said that U.S. retail sales through all channels spiked 5.5 percent this holiday season compared with last year’s, making it the best holiday season for retailers in five years.

According to the company, total retail sales for the period Nov. 5 through Dec. 24 spiked to $584 billion, not counting cars. Apparel sales were up 11 percent from last year, and 7.2 percent more jewelry found its way from stores to consumer homes this year than last. Consumer electronics sales grew 1.2 percent year-over-year and even furniture, a much battered retail sector, saw a sales increase this holiday season of 3.8 percent compared with ’09.

The question now is whether the end of the season will turn consumers to frugality again. The East Coast snowstorm might be slowing things down for a few days in that part of the country, but on the whole the direction of retail sales is still an open question.

Former GMAC Cuts Deal With Fannie Mae

Ally Financial, or the Lender Formerly Known as GMAC, reached a $462 million settlement on Monday with the Fannie Mae to avoid buying back bundles of badly underwritten mortgages that it sold to the GSE, once upon a time. The deal was something of an internal affair on the part of the U.S. government, considering that that majority shareholder in Ally is the government, which in turn is the conservator of Fannie Mae.

“At the start of 2010, we set a goal to substantially reduce risk in our mortgage operation and, during the last 12 months, we have successfully completed a series of steps toward that objective,” Ally CEO Michael A. Carpenter said in a statement. “This agreement, along with prior repurchase settlements with Freddie Mac and others, and the sale of legacy assets and operations, has significantly reduced Ally’s risk related to the legacy mortgage business.”

GE Capital Quits Mexican Mortgages

Banco Santander has agreed to buy about $2 billion worth of Mexican mortgages from GE Capital for $162 million. The sale, which also includes all of GE Capital’s operations in Mexico, is part of GE Capital’s divesting itself of “non-strategic” assets, such as (presumably) Mexican mortgages originated back in the mid-2000s. For Banco Santander, the move is certainly strategic, since the Spanish bank is already a major mortgage lender in Mexico.

Wall Street turned in a lackluster mixed day on Monday, apparently unimpressed by the prospect of higher interest rates in China. The Dow Jones Industrial Average lost a minuscule 18.46 points, or 0.16 percent, while the S&P 500 was up a scant 0.06 percent and the Nasdaq moved positively, but only by a microscopic 0.03 percent.